Genel Farm-In Boosts Development Prospects At Chevron KRG Blocks

Genel this week added two more upstream assets to its KRG-focused portfolio. Production may be some way off, but with Genel almost totally dependent on Tawke output, the acquisitions are key to the firm’s efforts at diversification.

Genel announced on 21 January that it has secured a 30% stake in Chevron’s Sarta license, with the major remaining operator with 50%. Genel is also taking 40% and operatorship at the Qara Dagh license where the US major retains 40%. The KRG retains its customary 20% of each.

Instead of making an upfront payment, Genel will cover part of Chevron’s share of field development costs for the next two years. An additional “success fee” will also be paid out to the US supermajor “on achievement of a production milestone.”

With the KRG already carried for 20%, Genel’s 30% stake would normally see it pay 37.5% of costs, with Chevron’s 50% stake equating to 62.5%. However the deal will see the firms split 2019-20’s planned $120mn development costs 50:50; Genel will in effect cover $15mn of Chevron’s share, though this may ultimately be dwarfed by any “success fee.” (CONTINUED - 1084 WORDS)

DATA INSIDE THIS ARTICLE

chart Genel Keen To Diversify With 84% Of Net Production From Tawke License ('000 B/D)